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A stackelberg duopoly with binary choices of objectives

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  • Athanasia Mavrommati

    ()
    (Department of Economics, University of Crete)

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    Abstract

    This paper analyzes a Stackelberg model where firms choose their objective functions (profit or revenue) in order to achieve maximum payoff. The objective of the present work is to demonstrate that depending on the unit cost of production, firms make either asymmetric choices of objectives (low values of the unit cost) or symmetric choices (high values of the unit cost). As a result of these choices, the payoff advantage alternates between the first and the second mover in the market.

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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I1-P79.pdf
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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 32 (2012)
    Issue (Month): 1 ()
    Pages: 843-853

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    Handle: RePEc:ebl:ecbull:eb-11-00243

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    Related research

    Keywords: endogenous objectives; revenue objective; profit objective; first-mover advantage; second-mover advantage.;

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    1. Michael Kopel & Clemens Löffler, 2008. "Commitment, first-mover-, and second-mover advantage," Journal of Economics, Springer, vol. 94(2), pages 143-166, July.
    2. Vardy, Felix, 2004. "The value of commitment in Stackelberg games with observation costs," Games and Economic Behavior, Elsevier, vol. 49(2), pages 374-400, November.
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